This paper explores the effect of exchange rate volatility and of the institutional quality oninternational trade flows of transition economies in Central European Countries by applying agravity model of balance panel between 1999 and 2008. The results show that nominalexchange rate volatility has had a significant negative effect on trade by applying Psuedo-Maximum-Likelihood (PML) estimator method over this period. The institutional qualityneed to be improved in case of size of government and the quality of regulation. The negativeeffect of exchange rate volatility on agricultural exports suggests that joining CentralEuropean Countries to the euro zone can reduce the negative effects of exchange ratevolatility on trade.